By Sramana Mitra and guest author Shaloo Shalini
SM: And how do you select vendors for cloud solutions?
PS: In certain cases, we have vendors we already know because we are moving from an on-premise hosting to a hosted environment, so the selection of the vendors has already been made.
SM: So, all the vendors you are working with have already been working with you in an on-floor premises capacity before?
PS: Not all of them, just some of them. In certain cases, we have an on-premise situation that we wanted and already put it off-premise for the reasons I have mentioned, so we did go with that software provider because they have the expertise managing our application. And in the other case is we select a vendor not based on the necessarily on their cloud computing expertise or ability to host but the functionality and capabilities of their system. For example, SugarCRM was the right application for us the hosting in that environment was really not something that we considered. Again, I view the hosting piece as well as the commodity piece. I am not all that concerned about service level agreements; I have the assumption that they will be provided.
SM: Can you elaborate on Sugar CRM vs. Salesforce.com? Obviously, you evaluated them against each other. What prompted your decision to go with SugarCRM
PS: Well, they are both very powerful packages. There were a couple of factors. There was a clear need for us to use SugarCRM, although Salesforce.com is supposed to be more robust and provides more functionality. However, SugarCRM was probably the right level of expertise and capability for us. One of the reasons why SugarCRM and Salesforce.com are so attractive is because the barriers to entry are low compared to on-premise CRM and then high implementation. So, the cost-to-benefit ratio of SugarCRM was much lower than Salesforce.com and significantly lower than for an on-premise implementation. Acknowledging that there might be high risk of implementation failure, we elected to go with SugarCRM with the lower cost and get a little more intimacy with the vendor because they seem to be little more in tune with new companies like us. Salesforce’s service is too big and not paying the requisite attention to SMEs base. Those were some of our reasons for going with SugarCRM.
SM: Speaking of the SMEs space, in your band of companies you are $300 million in that range of companies with, let’s say, $100 million to $500 million. What is your peer group doing in terms of cloud adoption? How active are the CIOs of this band of companies in adopting the cloud, and what are the thought processes prevailing? What are you hearing in the industry?
PS: Working with peers, I do not see high level of interest in adoption in the SME space. I view us as early adopters. Most of our business partners and my associates are really laggards in this space; they are a little wary of the hype and inflated expectations, as you mentioned. They are sitting back and waiting and seeing. There is also confusion about what the definition of cloud computing is or what it is not. In my view, most people do not have an appropriate perspective on or definition of what cloud is.
SM: How do you define it?
PS: Well, it is a very interesting question. I think cloud computing is an evolution, not a revolution. It is a result of 30 years of enterprise computing evolution. It has evolved from, more recently, application service providers and the advent of grid computing and utility computing. The cloud is again the latest manifestation of providing computing on or across the Internet .I think what differentiates the cloud from its predecessors – the grid and utility – is the idea of elasticity Software as a Service and the ease with which one can secure these services.
I would say one thing which is very important, is that in the technology of virtualization in particular, VMWare has created this new phenomenon of cloud computing. I have always been looking at service providers, but it has been too expensive because of the dedicated computing required in these data centers. With the advent of virtualization both inside and outside the organization, the economics have changed. It is more attractive and cost effective for the kinds of scale to bring those cost down. For example, I have been tracking the outsourcing of HR application for a decade. Three years ago was a $100,000 a year; now, it’s less than $20,000 a year, so the economics have changed dramatically, and I think the change has come about because of this idea of virtualization and better use of computing resources.